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TMI Blog2013 (8) TMI 640X X X X Extracts X X X X X X X X Extracts X X X X ..... ssels to M/s. Oil & Natural Gas Commission (ONGC in short) on charter hire basis for which they were receiving consideration. The said vessels were used during monsoon period and on call out basis for storage and transportation of crude oil from Bombay High. From the agreement for charter hire it appeared that the vessel is to be used for at a particular place or site for operation and service, which indicated that the vessel is stationery and primarily not used for voyage/transport of oil. The vessel is sought to be moored to the ONGC rig and act as a mother vessel receiving oil from the rig and pumping it to other daughter vessels which does actual transporting. The vessels used as mother vessel is required to carry out ship to ship trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouble banking operation provided such double banking operation carried out as per OCMF Rules and subject to safety and compatibility of the Contract Tanker with another Tanker double banking with her. c) Undertake voyage to discharge port/costal refineries in India. d) Provide lodging and boarding to charter's personnel as and when required by Charter limited to the spare accommodation of the tanker. e) Provide storage on board tanker for charter's equipment/materials as per space availability. f) To perform Mooring/demooring of tanker, maintenance of mooring system and mooring mode on round the clock basis, including but not limited. g) To provide other services as desir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le goods for use service". In para 4.4.2 of the said circular it is stated as follows: "Excavators, wheel loaders, dump trucks, crawler carriers, compaction equipment, cranes etc., offshore construction vessels and barges, geo-technical vessels tug and barge flotillas, rigs and high value machineries are supplied for use, with no legal right of possession and effective control. Transaction of allowing another person to use the goods, without giving legal right of possession and effective control, not being treated as sale of goods, is treated as service". 3.4 While introducing the storage and warehousing service in Finance Act, 2002, the Ministry had clarified about the scope of service as follows: "Storage and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or under the category of supply of tangible goods for use and the Hon'ble High Court held that the activity of supplying vessels to ONGC for its offshore operations would not get covered under the mining services but would be covered under supply of tangible gods for use service which activity was brought under the tax net effective from 16/05/2008. The said decision was affirmed by the Hon'ble apex Court also. The ratio of the said decision applies squarely to the facts of the present case and accordingly, the impugned demands are not sustainable in law. The appellant is a Government of India undertaking and therefore, cannot be alleged to have indulged in suppression of facts with an intent to evade tax and therefore waiver of pre-deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l produced at Bombay High and also to transport the same to the refineries or to the ports situated in various parts of India. The purpose of production of oil is for its use and since the crude oil is produced offshore, they have to be necessarily transported to refineries situated onshore. Storage of crude oil is only incidental to the main activity of transportation and the vessels are hired only when pumping of crude cannot be made through pipelines laid under the sea bed or in specific weather conditions. Thus, the primary object of charter of hiring the vessel is for transportation of crude from the place of production i.e. in the High Sea to the refineries in India and not for "storage and warehousing". In the case of Indian National ..... X X X X Extracts X X X X X X X X Extracts X X X X
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